To meet decarbonization goals, private organizations, non-profits, and governments are utilizing energy efficiency and renewable projects. A significant barrier to financing a clean energy project is the lack of connection between capital and opportunity. With Carbon Financing becoming more mainstream and a readily available source of capital to fund sustainability projects, it will be crucial for organizations to educate themselves on what is available. Those who leverage the financing products at their disposal and know how to take advantage of the resources available will have a competitive advantage when it comes to financing and successfully implementing carbon reduction strategies and projects. Below is a set of financing methods particulary suited to Carbon Financing and ways to think about which one is most applicable. For additional financing guidance, visit the Better Buildings Financing Navigator.
Internal Financing for Carbon Reduction Projects
Internal financing refers to an organization’s use of existing financial resources to pay for carbon reduction projects. This fact sheet summarizes 6 common internal financing modes: Capital Expenditure/Operating Outlay, Self-Funded Energy Performance Contracts, Carbon Fee Funds, Green Bonds, Green Revolving Funds, and Capital Investment Funds.
External Financing for Carbon Reduction Projects
External financing refers to funding acquired from sources outside the organization. This fact sheet summarizes 7 common external financing modes: Energy-as-a-Service, Energy Savings Performance Contracts, Power Purchase Agreements, Sustainability Linked-Loans, Green Loans, Property Assessed Clean Energy, and On-Bill Financing/Repayment.